Most of the nation's retailers rang up strong sales in July, with the notable exception of J.C. Penney, which reported Thursday that sales at stores open at least one year dropped 5.7 percent.
Retail stocks rose on the stronger-then-expected sales reports that showed consumers are still spending at a fast clip on clothes, pharmaceuticals, furniture and personal computers.
"The very hot weather likely boosted sales of seasonal items like fans at places like Sears and Wal-Mart and so on," said Richard Berner, chief economist at Mellon Bank in Pittsburgh. "The bigger picture is that jobs, income and the fundamentals were looking quite good. People were feeling good about the economy."
The Standard & Poor's Retail Index rose 0.4 percent in early trading, led by Kmart, up 9/16 to 16 3/4; Circuit City, up 3/4 to 47 7/16; Federated Department Stores, rising 1 point to 50 ¼; and Wal-Mart, up 2 5/8 61.
J.C. Penney's stock fell 4.4 percent to 54 1/2 after the department store's disappointing sales report. Losses were offset, however, by an 8.2 percent increase in same-store sales at its Eckerd Drugstores and a 7.7 percent increase in catalogue sales.
Ethan Allen Interiors said total sales rose 16.8 percent to $182.7 million over a year-ago. The furniture retailer also reported a 34.6 percent rise in net income for its fiscal fourth quarter to $20 million or 68 cents a share against 51 cents in the year-ago period.
Separately, the company also announced its board has authorized the repurchase of up to 1.5 million shares, and indicated it's mulling acquisitions in the year ahead.
"I am also pleased that we continue to strengthen our balance sheet so that today, we are practically debt free," said CEO M. Farooq Kathwari. "We have the ability to use cash to grow our business and in fiscal 1999, we plan to substantially increase our investments in manufacturing and retail."
- Circuit City Stores said same-stores sales rose 9 percent, and total sales rose 28 percent to $830.4 million. The consumer electronics retailer said sales of personal computers remained "especially strong"over the period. Said Mellon Bank's Berner: "This could be important because PC sales have been a little on the weak side, but we'll have to get reports from the other retailers before we can see what overall retail PC sales look like."
- Wal-Mart Stores reported net sales of $9.73 billion, up 16.3 percent. Same-store sales at Wal-Mart rose 7.2 percent.
- Kmart Corp.'s July same-store sales rose 5.9 percent, ahead of its expectations. Total consolidated sales rose 6.1 percent to $2.34 billion for the period.
- Dayton Hudson said same-store sales increased 5.2 percent from the same period a year ago and that total sales were $6.810 billion in the second quarter. "Sales in July at Target and the Department Stores were slightly ahead of plan, while Mervyn's was below expectations," sad CEO Bob Ulrich.
- Federated Department Stores said sales on a comparable-store basis increased 3.9 percent in July.
Written By Emily Church